Medicare & Cash-Based Physical Therapy: My Story

Medicare Direct Pay Cash Based Physical Therapy

Well this has been a long time coming. It’s the elephant in the room, Big Brother, aka Medicare. The relationship dynamic between Medicare and physical therapists is a tough one to navigate, considering all of the compliance and payment issues it is difficult on a good day. Add in a dose of cash based physical therapy and you have a recipe for muddy water that you might not want to drink.

Today, as the beginning of a 3 part series on the relationship between Medicare & Cash-Based physical therapy. I am going to describe my experience with running a cash based physical therapy practice and not being enrolled with Medicare.

Medicare typically sets the standard for what most private 3rd party insurance companies implement. Thankfully, while some are still in the dark ages, most 3rd party payors will honor direct access reimbursement to their insured beneficiaries. I live in North Carolina, and I am lucky that I have very favorable Direct Access laws. I rarely receive a physician’s referral and most of my patients do not have a prescription. I have not had a patient tell me they were denied because of a lack of a physician’s referral, script or prescription for physical therapy.

Unfortunately, this is not how it works with Medicare. Every Medicare beneficiary needs a prescription from their physician and a signed plan of care to receive somewhat limited physical therapy benefits. Medicare rules require that Medicare Beneficiaries only receive treatment for “covered services” from Medicare providers. There is a limit on the amount of services they can receive unless the patient has specific needs required beyond typical “covered services” and then modifiers are needed.

The Problem

When starting my practice I chose not to become an in-network provider or enroll with Medicare so that I can provide high quality 1-on-1 hands-on care to patients for as long as I determine is necessary. The big problem is that as a cash based out-of-network physical therapist I am now very limited in who, what and how I can treat the huge and rising Baby Boomer population.

As I was writing my business plan I had no clue there would be an issue with Medicare. I assumed that everyone in the United States had the right to choose their healthcare provider. I first learned this might be an issue when searching for information on how to file an Advanced Beneficiary Notice (ABN). I was incorrectly advised by another therapist, that I needed my Medicare patients to sign an ABN so I could treat them in my practice.

ABN- Advanced Beneficiary Notice of Noncoverage- a Medicare form used before a therapist provides services that are not medically reasonable and necessary. This is only a form for a participating or non-participating provider, not for a therapist who does not have a relationship with Medicare.

My Reality

In my search to find out what needed to be on an ABN I started to realize the reality of the situation.

As a physical therapist in private practice you have 3 choices regarding a relationship with Medicare.

  1. Enroll and participate (PAR)
  2. Enroll and not participate (NON-PAR)
  3. Have no relationship with Medicare (My status)

You can choose your Medicare arrangement and provide cash based services to patients who are not Medicare beneficiaries. In options #1 and #2 you can provide treatment to any Medicare beneficiary and you must document and maintain compliance as per Medicare regulations. It is only option #3, no relationship with Medicare, where you cannot treat Medicare beneficiaries for “covered services.”

Massage Therapy vs. Physical Therapy

When I was a Licensed Massage and Bodywork Therapist in North Carolina and in California I could treat who ever I wanted. I just could not manipulate a joint or provide a medical diagnosis. Now that I am practicing as a physical therapist in North Carolina, I cannot manipulate the spine without a physicians order (NC law) and I cannot treat Medicare beneficiaries without a physician’s referral. Furthermore, in my cash based practice where I am not a Medicare provider, I cannot treat Medicare patients for “covered services”.

The deeper problem was, no one I spoke to really seemed to know the rules. Every time I asked or inquired I would come away with a different answer. I was basically told by one person, who was the state level reimbursement specialist, that I am not allowed to Not be enrolled as a Medicare provider and if I am not enrolled that I basically can’t even breathe near a Medicare beneficiary until I am. Even the APTA Medicare advisor could not give me a black and white definitive answer on who I could treat and for what. It seemed the more questions I asked the more restricted I felt and the more people turned their attention to me to say “no.”

Fortunately, reality and the truth are often misunderstood. There are some instances where it is totally appropriate and legal for a Medicare beneficiary to be seen by a physical therapist who is not enrolled as a Medicare provider.

No Relationship With Medicare

I do not have a relationship with Medicare, thus am restricted from seeing Medicare beneficiaries. I am OK with this as I know that I cannot treat everyone, but I can be compassionate to everyone and help them seek the care that they need. If someone contacts me who requires a “covered service” I refer him or her to another physical therapist owned practice in town. This is good for my relationship with the patient, because it still shows I care about their needs. This strategy also serves to build relationships with other physical therapy practices in town, which one-day may refer a patient to my practice.

Many people just want to be treated by the therapist who was recommended to them and to feel better. They do not always understand that when they became a Medicare beneficiary, they lost their right to choose their provider. If I do see a Medicare beneficiary in my office, I have them sign a release form stating that they understand these issues and that we are clear on the boundaries of my services.

Closing Thoughts

I have been successful in this model and so can you. If you are now concerned that there is one more barrier to taking the next step in your journey to freedom in practice, don’t be.

You do not need to be able to treat Medicare patients to start a successful cash based physical therapy practice.

Physical therapy is underutilized and there are plenty of other people who need the care and value you can provide. There are many other ways to serve this population with our expertise. I have participated in a program for the last few years called “A Matter Of Balance,” which is a multi-week educational program offered at a local church.

I chose this path to keep things simple and effective. It allows me to maintain control over my style of practice, the cost to collect payment, the fees I charge and to decrease my need to comply with, or risk of defaulting on, strict compliance regulations. I also have the benefit of choosing how much time I can spend with my family, taking care of myself exercising, practicing yoga and tinkering with vintage scooters.

Next up, we’ll look at Medicare enrollment and choosing to be a Participating Provider or Non-Participating Provider. Medicare is a huge topic. I know there are probably many more questions than answers and I believe the conversation is just getting started. If you are looking for a black and white definitive answer, you will likely not be satisfied. I would love to read your comments below and please click a share button to invite your colleagues to join the conversation.

Educate Yourself on Medicare!

As you can see, there are quite a lot of confusing legal regulations on taking private-payment from Medicare beneficiaries … Regardless of the type of service or the type of physical therapy practice. And the above information doesn’t even scratch the surface!

To get the entire story and remove the confusion and fear you may have surrounding this topic be sure to check out the next blog post installment in this series Medicare Enrollment – Should you be PAR or Non-Par?

Next Up: Medicare Enrollment – PAR or NON-PAR?


Plus, whenever you’re ready… here are 3 ways I can help you grow your physical therapy business:

  1. Grab a free copy of my book

It’s the road map to launch, grow & scale your physical therapy business. -> Click Here!

  1. Join our CashPT Blueprint Program and be a Case Study.

I’m putting together a new case study group this month and if you’d like to work with me to launch your cash practice… just send me a message at with the words “Blueprint”.

  1. Work with me and my team privately

If you’d like to work directly with me and my team to take you to 6 or 7 figures… just send me a message at with the words “Private”… tell me a little about your business and what you’d like to work on together, and I’ll get you all the details! 👈


About The Author

Aaron LeBauer

Aaron LeBauer PT, DPT, LMBT started a 100% cash based physical therapy practice right after graduation. He's on a mission to save 100 million people from unnecessary surgery & enjoys helping passionate therapists build successful businesses without relying on insurance.


  • Brad Kelly, PT

    Reply Reply August 6, 2014

    Thanks for sharing the excellent insight you have gained in your experiences. This is very helpful information!

  • Patricia Young

    Reply Reply August 6, 2014

    Great information Aaron, Thank you. I called APTA to ask about Medicare matters. I was told I needed a signed plan of care but not a referral as the the POC serves as that anyway.

    I also asked about cash based Medicare patients. I was told that if it is a service that is not covered ie personal training/exercise program, it was OK. One could switch them into a wellness program. For example I have a man who I have done 8 visits with for low back pain. He is now strong and pain free. However, he wants to see me every other week for follow up and maintenance. Medicare will not pay for this. So do I not see him? The more difficult part is that ortho originally told him to go to his clinic’s in house Personal Trainer or to do Pilates! We are competing with the entire wellness industry and have to be concerned with Medicare rule. This is a huge population that needs services and we are essentially being excluded. My understanding is that APTA is working on it from a HIPAA angle: One’s medical information is not truly confidential once it is submitted to Medicare. Some elders think they should have a choice about what they want to share with the government.

    • Aaron LeBauer

      Reply Reply August 6, 2014

      Thanks for your comment! Yes. Services such as personal training, exercise, pilates, yoga, & even acupuncture are not “covered services.” Regarding the patient you mentioned, if you have treated him in your practice as a Medicare provider, you should be able to continue treating him and have him sign an ABN if he desires follow up care that is not covered.
      I agree, we (physical therapists) are competing for patients with the wellness industry (not doing as well as we should, but getting better!) and we all need to let the APTA know we want them to prioritize patient choice (medicare opt-out) in lobbying efforts.

  • Nancy Beckley

    Reply Reply August 8, 2014

    Aaron – Very nice article, and represents your story. Tinkering with Medicare rules is not for the faint of heart. Many Medicare providers do not understand documentation regulations, much less Federal healthcare laws and the implications, whether enrolled in Medicare or not. The slippery slope starts with who determines if the service meets Medicare coverage criteria as medically necessary/Medicare benefit? Given the complexities of the CMS expanded discussion of skilled maintenance therapy – it is not as easy as it would seem.
    Congratulations on your own personal success in CashPT!

    • Aaron LeBauer

      Reply Reply August 8, 2014

      Nancy, Thanks for your comments!
      I agree that it’s complex and slippery. Who determines medical necessity of the beneficiary, was also one of my questions, as it can be seen as relative to ones own point of view.

  • Christopher Anthony

    Reply Reply August 8, 2014

    Great work, Dr. LeBauer. Your post is diligent, compassionate, and informative. This post is a great resource for PTs looking to navigate better care for our communities.

  • Katherine Price

    Reply Reply August 18, 2014

    You are so encouraging Aaron! I did start my practice as a cash-based practice but found the struggle of living in a retirement community with a large percent of our population over age 60. I have become credentialed with Medicare and about 80% to 90% of my patients are on Medicare. I’m taking one day at a time and seem to be going forward but it has been very discouraging and I always enjoy reading what you have to say and what you are doing. Keep up the great work!

  • Katherine,
    Thanks for your comment and compliments! It sounds like you have a few challenges you are tackling really well. There are quite a few “cash-based” practices who are also Medicare providers and they do quite well. So that is not a failure by any means.
    There is also the option to participate with Medicare and be a non-participating provider and accept same day payments from your Medicare patients. Have you considered that as an option for your practice? Nancy Beckley just wrote a very detailed post on my blog recently discussing this issue. You can find it here:

  • patricia tschannen

    Reply Reply August 6, 2015


    Thanks for you work in this area. It’s much appreciated!
    Where can you find out what exactly is considered a “covered service” and what is not according to Medicare. You stated above that if you do see a MCR beneficiary, you have them sign a release form stating that they understand the issues and that they’re clear on the boundaries of your services. Do you state specifically what your services include in this form?

    • Aaron LeBauer

      Reply Reply August 7, 2015

      Thanks for your comment. You are certainly welcome.
      Medicare “covered services” are generally services provided to a beneficiary with a medical condition and who require a skilled intervention.
      You can find out if your test, item or service is a covered here
      Yes, I do state that the services I provide are massage therapy, health and wellness information, exercise instruction, performance enhancement and private yoga instruction.
      I hope that helps!

  • Mandy

    Reply Reply January 26, 2016

    Hi Aaron! In searching for answers I came across your web site. We are a cash based PT clinic that does accept Medicare only. (as a urogenital specialist PT office, these are our main patients!) We are out- of network for all other insurance companies. The problem I run in to, as the medical biller, is what to do when Medicare is the secondary payer, or the patient has a managed care insurance. I can’t submit those to Medicare first. We are out-of-network with the primary insurance or the managed care insurance. Like you, I have gotten a different answer any time I ask the question! My question for you is……do you know of any other PT office that has this scenario? If so, maybe they could help me. Thank you! Mandy, Milestone Physical Therapy, Roseville, CA

    • Aaron LeBauer

      Reply Reply January 28, 2016

      Hi Mandy,
      thank you so much for your comment and question.
      I believe in this case what you should do file the claim with the patients primary provider, still treating this patient as a Medicare beneficiary, in which case you must file the claim for them. Then it’s up to their insurance company reimburse the patient or to pass on the information/bill to Medicare. If you are out-of-network with their primary insurance and your patient doesn’t reach their deductible with you and does not receive reimbursement, that is just like lots of other folks, and they just need to understand their insurance and the product they purchased.

      I haven’t run into this scenario myself, however two suggestions would be to ask in my Facebook group, The CashPT Nation, as someone there has probably run into the same scenario, and/or check out Jarod Carter’s Medicare Ebook where he answers this and similar questions.

      • Mandy

        Reply Reply February 1, 2016

        Thank you Aaron! I’ll do that!

  • Taylor

    Reply Reply September 15, 2017

    Hi, Aaron
    I plan to start a Pedatric PT home care business but I’m lost with where to start any suggestion. Please help. Thanks

  • Maria

    Reply Reply April 13, 2018

    Can a practicing PT do cash private pay home visits for personal training/wellness if it’s non skilled ( the family doesn’t want to follow up with their parents exercise program or there’s no specific problem (just not moving around enough etc)
    IE Can. Licensed PT become a personal trainer to otherwise healthy Medicare beneficiaries?

  • Maria

    Reply Reply April 13, 2018

    Sorry I have another question: if a non skilled home health agency calls and says a patient is requesting a personal trainer or non covered general exercise program do you still need an ABN? Or some sort of signed document stating that you’re proving wellness services not physical therapy.? If so can you recommend a resource for that document? There are several caregivers of patients with chronic conditions that no longer revive skilled care and they want me to come and just do general strengthening visits for wellness and improved strength but want that as in home therapy by me.

    • Aaron LeBauer

      Reply Reply October 19, 2018

      Hi Maria,
      thanks for your questions.
      An ABN is only for enrolled Medicare providers.
      If you need an official document to provide to patients when they are Medicare beneficiaries and you are not an enrolled provider so you can work with them my recommendation is to sign up for Gwen Simons cash practice training and consultation
      Just let her know you found out about her here 😉

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